There are many financial and corporate elites in UAE who are struggling to repay bank loans or pay back their business obligations due to economic recession. In such a drastic situation being the capitalist countries too hit by the waves of global recession, the possibilities of bankruptcy are to be seriously discussed and studied.
What is bankruptcy? And How to Do Bankruptcy?
Bankruptcy is a legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor’s assets are measured and evaluated, and the assets may be used to repay a portion of outstanding debt.
Bankruptcy offers an individual or business a chance to start fresh by forgiving debts that simply cannot be paid, while offering creditors a chance to obtain some measure of repayment based on the individual’s or business’ assets available for liquidation. In theory, the ability to file for Bankruptcy can benefit an overall economy by giving persons and businesses a second chance to gain access to consumer credit and by providing creditors with a measure of debt repayment. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred prior to filing for Bankruptcy.
When faced with foreclosure or any such financial insolvency, the final option in this situation should be bankruptcy. Declaring yourself bankrupt is the only legal way to get rid of your financial setbacks. However, the process of filing for Bankruptcy is easier said than done. When you file for bankruptcy, you have to explain to the presiding bankruptcy trustee or judge about how you got into this financial rut. In the meantime, the bankruptcy court will ask you to file the entire list of assets and outstanding debts with them.
When do you file for bankruptcy, you need to explain to the presiding Bankruptcy trustee or judge about how did you fall into such an awkward situation of financial crisis.
The UAE government has issued a new Bankruptcy law. Law 9 of 2016 was published in the Official Gazette on 29 September 2016 and comes into force on 29 December 2016.
According to this, businesses that are currently in dire straits and are going to be in trouble in short future are permitted to facilitate immediate finance and helping the business to push off the payments like bank loans, supplier bills, etc. from one year to the maximum of 3 years. This gives the business a new leaf of life and strengthens the organization. (Protective composition – Bankruptcy)
For business firms that are already in dire straits, the Court will intervene and provide restructuring assistance. So that, business firms can take up to 3 years to pay off their current liabilities and they get new financial assistance as well for business restructure. (Restructuring – Bankruptcy)
Businesses that are already closed down or wound up due to financial crisis can use bankruptcy procedures for liquidation in a legal way and could get rid of all the business liabilities. ((Liquidation – Bankruptcy)
Even if the business is closed down years back too, using the bankruptcy in legal way could help to write off all the debts, dues and liabilities and liquidate the business in proper way.
Business men, managers, directors, etc. whoever got tied up with business liabilities can use this option of bankruptcy to escape from all the business burdens and save themselves from all the related legal issues.
By filing Bankruptcy in the court, those business firms, the owner/director/manager of the firms are relieved from all the legal cases once and for all. All existing cases are being cancelled and the owners are becoming free from all kinds of cases. Anyone who has won Bankruptcy will not be able to start a new business for the next 3 years, but will be able to stay on any work visa in UAE and continue the job as long as he wishes to continue it.